Ask HN: Ethical VC Funds?
35 comments
·February 26, 2025mtmail
Some funds are about distributing money, not about getting something in return. Often the work is or remains open source. The classical VC and angels expect a monetary reward.
colinbartlett
One alternative VC fund that comes to mind is TinySeed: https://tinyseed.com
Though perhaps the "ethics" you're referring to, they invest in bootstrapped companies who aren't necessarily on the venture track moonshot rat race. For me, that's a big part of the unethical side of VC: Throwing money at a 1,000 ideas and expecting 999 of them to fail in hopes of one goldmine.
My own company, StatusGator, took a small investment from them even though we swore we'd never take VC money. It was a great choice for us and I feel TinySeed's ethics and values far outshine other investors.
KaisoEnt
Look into ESG.
This is a whole controversial world in and of itself.
coreyh14444
I'm a partner in an Article 8 ESG fund/studio (KRING Ventures) here in Denmark. We definitely qualify as ethical and we hope to make a financial return at the same time. There is also a concept of creating "Zebras" not Unicorns and that's where we focus.
cloudbonsai
My real question is: Is there any asset manager who does not have an ESG program in 2025?
Even a small PE shop I personally know is launching an ESG fund this year (asian credit ESG fund). Everyone seems to be a PRI signatory nowadays.
asim
Hadn't heard of it before, thanks will look into it.
For those curious https://en.wikipedia.org/wiki/Environmental,_social,_and_gov...
kklisura
Be sure to hear other side of the ESG, namely Aswath Damodaran's take on it [1] - although it's heavy on the financial/finance side. That's just one video, but you can find more about his position.
gwbas1c
> Is there room for a more altruistic form of investing?
One common trend that I see is that the bad guys often think they are the good guys; and the good guys often screw things up so badly that they create nasty messes and end up turning into the bad guys accidentally.
For example, in Massachusetts we want to meet climate goals. To do this, we subsidize homeowners in getting heat pumps and updating insulation. To fund the subsidies, electric and gas bills went up and many poor people can't afford them. And oil bills stayed the same, incentivizing people to continue to heat with dirty fuel.
mhluongo
There are certainly funds with a thesis that you might consider good for the world. Eg social impact, femtech, women and BIPOC-founded co's, etc.
LPs are often large allocators like pension funds who are making decisions for other people's money. I do think there's room here, but you have to ask yourself who the LP's are.
jmd3
There are also platforms that allow individuals to invest directly in impactful opportunities without the traditional LP structure, like https://www.citizenmint.com, https://www.energea.com, and occasionally investments on https://www.yieldstreet.com.
memhole
Here’s an example of one that shut down: https://calmfund.com/writing/pause
Over the years, my consensus is that if you’re playing by values you’re leaving alpha on the table. Alpha that another company will try and likely scoop. Not that we shouldn’t keep trying, but it likely makes an already difficult game that much harder.
Someone posted some EU funds. So, maybe the EU spends more effort on this?
As far as the US, you can also look into state grants. Those from what I’ve researched have requirements such as partnering with research institutions or other stipulations like matching. It’s nowhere near, here’s my idea and thank you for the check.
some_random
While you are leaving alpha on the table, I don't think that has to be a hindrance until you hit a massive scale depending on how you define ethical. There's always alpha in becoming an experts in some vertical to invest in, just choose a non-controversial vertical and you're already most of the way there. Keep in mind that all the big players have lines in the sand to some degree and often refuse to work with "sin industries", they're leaving alpha on the table too.
memhole
Yeah, good point. There are some lines in the sand. I’ve heard stories about the surprising number of startups that are basically doing illegal things and justifying it as being disruptive. Fortunately it comes up during diligence and guess what they don’t get funding.
tnolet
There are two parts to this:
- The Limited Partners (LPs) e.g. the folks putting money into the VC fund. E.g. would you consider money from Saudi Arabia be ethical?
- The portfolio strategy. E.g. would you find investing in some company in the carbon based fuel space be ethical?
MrMcCall
Those are great questions.
For the first, the answer is "Can I do more good with the money than the bad that has been done to make it?" I don't have an answer for that, but I guess the cop-out is to say, "It depends on what good you're gonna do."
That said, I wouldn't get into business with those folks, but that's just my hard line stance on compassion vis a vis what they spend their money on.
For the second, if it is focused on more efficient means of utilizing carbon-based fuel, then it could be, but the problem is that increasing efficiency usually leads to more use, historically. That said, I'd vote "No" on that one, too.
tlb
The best way to invest ethically is to do it yourself. When you give your money to a VC firm to do it, they end up following bogus rules like ESG.
When I invest, it's always a mix of wanting the company's product to exist in the world and wanting to make money. Making money lets you invest in future things you want to exist in the world, so it's at least a good instrumental goal. But more importantly, companies that don't make money usually don't grow. So the social impact of investing in unsuccessful companies is usually small. The goals are mostly aligned as long as the product is something you want to exist.
tyrw
I worked with Capricorn [1] for several years, and these topics were always top of mind there.
They have the goal of making money first and foremost, but subject to the investments themselves being good for society, and serving LPs who do the same. E.g. they work closely with Skoll Foundation [2] and Skoll Global Threats Fund [3].
Another fund that we worked closely with was Omidyar Network [4]. They have more of a hybrid model of investing + philanthropy under one org. It meant they could do some projects that we couldn't at Capricorn, but also made it harder to measure concrete outcomes, which LPs tend to want.
joshdavham
Maybe I’m a bit naive, but I’ve never really thought of VC as being unethical, although I’ve obviously heard of some bad stories (e.g., David Sacks and Zenefits).
What makes you feel that much of VC is unethical?
asim
I've operated in the startup space for 20 years and over that time I've seen all sorts of things. You could pin that down to the individuals or the collective firms themselves. I don't think people initially intend to be harmful but over time for some reason power wealth status, whatever it might be corrupts many of them. I'm not always in a very specific right versus wrong way, but in a way where they feel they're justifying their actions as being something good. The problem is the good of the elite society is not quite the same as the public good. And quite frankly, the moral values can be questionable at times because they change based on whatever they need. It sounds like I'm painting the whole industry as a terrible thing. I don't think it's meant to be, but again people are easily corrupted. Maybe corrupted is the wrong word, but they are easily swayed to give up a certain stance all in the face of making money, achieving a higher status or whatever justification is given.
I should also say as someone who raised VC funding that also corrupted me. I find that power and money goes to most people's head. I didn't come out of it unscathed. In fact, I was incredibly arrogant and I am regretful for many of my actions. All in the pursuit of what I thought was a way to help people but effectively caused me to question what I was doing.
Havoc
I'd say you'd need to look at the individual partners - any sort of integrity will ultimately have to flow from there.
I suspect in practice most would like to see themselves as good people with integrity but ultimately money will override all but the most egregious stuff.
MrMcCall
Very well put, indeed.
I would only add that very few people ever admit -- even to themselves -- that they are unethical or even downright evil. Part of the delusion that convinces people to be amoral includes distancing themselves from the reality that we all have a moral compunction to be compassionate, even if most people fail to choose those paths for others outside their in-group.
And then, once money is involved, those knobs are turned up to 11. And look who runs most of the world now. Hell, even the poors are deluded into supporting them, which is a Goddamned shame, but expected once you really understand human nature and the nature of the universe we inhabit. We are fully free to choose callous idiocy over compassionate wisdom, even to our own detriment.
JumpCrisscross
Make your money and put it to use. I’m sceptical of dual-mission VCs as change agents for society. They do good work. But not as good as the most militant non-profits or political entrepreneurs. At the same time, they fail to generate the returns that might empower you to become that change agent through wealth.
> cooperative syndicates (like angel syndicates) be a good way to do it instead
These are fun to be in but a social club by another name. You’ll have some wins, hopefully, but if you calculate an IRR it should wind up around the S&P 500 minus a country-club fee.
Are there any ethical VC funds? This is a genuine question. It feels like the majority of venture firms can rationalise away their position as doing good for the world but when you start to dig into it, the sole goal is making money and who they make money for isn't always the most righteous of people or entities. Even then many of the individuals at firms can be questionable, involved in scandals. And the things invested in, while there can be a thematic preference, often everything is thrown out the window in the pursuit of greed or missing out on a deal.
Are there ethical VC funds out there? Is there room for a more altruistic form of investing? Is the sole goal just making money for them?
Could cooperative syndicates (like angel syndicates) be a good way to do it instead? Or is it the lack of follow on funding that's really going to kill a company?